Setting up a Keynesian cross model in Excel

Summary

In this assignment, students are guided through the process of setting up a standard Keynesian cross model in Microsoft Excel. Excel is used to solve for GDP (and other variables) using the "iteration" option so the model is entered just as it appears in a textbook. Students are then asked to use the spreadsheet to explore the model by answering a series of questions.

Learning Goals

Students gain a better understanding of the basic Keynesian cross model, and in particular how the terms interact with each other. They also learn some basic spreadsheet modeling skills.

Context for Use

This is designed for principles-level macroeconomics courses. It may be used in a computer laboratory setting or as a take-home assignment.